There are a few different things that determine your ability for obtaining credit from a financial institution, and one of the most important among them is your credit score. Your score is an index that is designed to show your qualification status and how much of a loan or credit card limit you are allowed.
For those who have had trouble with payday loans in the past, it often ends up dragging your credit score down over time. Even when you’ve handled that situation, with a consolidation loan or other option, your credit score lingers. You may notice a drop and want to do whatever you can to bring the number back up.
The good news is that there are ways to do so. We’ll look over some of them so you can determine what will work best for your situation.
Regular Bill Payments
One of the things your credit score is based on is the number of late or non-existent payments on your payday loan help. You can make improvements to your credit score by ensuring you send in timely payments.
Monthly payments are fine, but weekly payments may be even better. Even if you don’t have perfect payment history, the one thing to be cautious about is letting an account go into collections. This will lower your credit score quickly and can make it impossible to get further loans.
Clear Credit Card Balances
Another way that you can increase your credit score is by paying off the balances on most of them, while using one or two for the majority of your transactions. You might wonder why this is a good idea.
Owing multiple amounts on numerous cards can make it seem as if you have chaotic spending habits. Instead, use one credit card for most of your purchases, preferably a card that has the best interest rate in comparison to other cards you have access to.
Don’t Remove Good Debts
Some people believe that having a perfect credit record is important. To achieve this, they may call their banks to eliminate a debt as soon as it is paid off. They also may close down accounts with a number of good financial transactions, without considering that debt repayment history and account length play a role in credit history.
If you have an account that doesn’t have late payments, defaults, or other troubling marks, it’s almost always better to leave it intact as it keeps your score high.
Keep Balances Low
We’ve mentioned that payment history impacts your credit score, as does simply owning a credit card. One way to improve your credit score is by keeping the balance at a specific place. The sweet spot is to utilize about 30 to 35% of your credit card limit and leave the rest untouched. This shows that you don’t need to use the entirety of the limit to keep yourself on sound financial ground. Keep this trick in mind, and it can result in a better credit score over time.
Communicate with Your Creditors
If there comes a time when you don’t think you can make your payment for the month, get in touch with your creditor as soon as possible. In some cases, you may be able to reschedule the payment to a time that is more convenient for you. Work with the creditor to avoid having your account listed with a collector.
A debt consolidation service can help you negotiate something if things are behind and you need new options.
Separate Accounts After Divorce
For those who have gone through a divorce, it can be an intelligent idea to separate your accounts and run one that is only yours. The reason behind this is because the spending habits of the other party will reflect on you and vice versa. It’s a good idea to clear all joint credit and close accounts if a divorce is impending or has already occurred.
You should also notify all financial services that the relationship is over so they can offer you advice on best practices.
Correct Inconsistencies on Your Report
When you go through your credit reports, it’s possible that you’ll run into mistakes. The last thing you should do is ignore this. Instead, you should get involved and work to sort out the error, so your credit report only shows accurate information.
You should check your entire credit report at least once a year, from each provider, to see what is listed as far as debt records and accounts. Find out about any issues so you can resolve them as quickly as possible.
Become Authorized on Someone’s Card
If you have credit problems and need to bump up your score, one option is to be authorized on someone else’s card. Assuming the other person has a good credit score, you can sponge some of that off onto your own credit report.
This works because it helps to reduce your credit utilization ratio. It also will bring the transactions from the other party onto your records. Some people like to take this route with a child as a way to teach them about financial responsibility.
While these tips are for those who have had previous payday loans, they apply to anyone who wants to boost their credit score. Implementing just a few will add up and bring you a higher score in a matter of time.
With that in mind, if you are still working to pay off your payday loan payments, it’s best to handle that first. If you are looking for relief, you may want to consider a payday loan consolidation solution. Companies like RealPDLHelp.com can consolidate your payments and bring you closer to a happy financial future.